Closed Mountain Shadows may have path to rebirth

1959: Mountain Shadows resort opens and establishes itself as one of Paradise Valley’s premier resort destinations over the next three decades.

1992: Development agreement between the then-owner Marriott Corp. and the town to facilitate the annexation of Mountain Shadows into the town. The agreement has become a point of contention between Crown and the residents, with Crown claiming the agreement allows them to develop at a higher density than the residents want.

2004: Mountain Shadows closes, leaving behind a blighted property in a town known for its well-manicured resorts and luxury homes. Functioning golf course and residential components remain.

January 2007: Crown Realty, developer of the Montelucia Resort and Spa, buys the 68-acre Mountain Shadows from Host Marriott Corp. for $42million. Host Marriott Corp. is now known as Host Hotels & Resorts.

February 2007: Crown proposes a boutique-style resort and residential project for Mountain Shadows that includes 320 rooms and 26 resort patio homes. However, the plan never moves forward, and the resort remains shuttered.

2008: Crown puts the Mountain Shadows resort on the market.

December, 2011: JDM Partners and Crown Realty enter into a purchase agreement for the resort.

Jan. 26: A pre-application is submitted by JDM Partners that features a conceptual plan of the property.

April 4: JDM does not sign an extension for the purchase agreement of the property, leaving ownership of the property with Crown.

April 19: A trustee’s sale for the resort is set for July 26, after Crown defaults on a $32million loan.

May 15: Crown reactivates its special-use permit to redevelop the property.

May 21: Solage Hotels and Resorts and Crown announce a preliminary joint-venture partnership agreement to help brand the resort and keep it from foreclosing. Negotiations later broke down.

July 19: Crown files for bankruptcy in federal court, avoiding the trustee’s sale.

July 20: Crown files building-permit applications for luxury homes to be built on the resort’s 18-hole golf course, invoking a 20-year-old agreement the town made with previous owners of the resort, which owners say gives them the right to increase density and develop on the golf course.

Sept. 24: Planning commission recommends special-use permit to council with more than 100 stipulations.

Jan. 10: Next public discussion for Mountain Shadows. Public comment will be permitted.

The long-shuttered Mountain Shadows resort in Paradise Valley could get some help in its struggle for a new existence.

Rick Carpinelli, senior vice president of acquisitions and development for Crown Realty & Development, said at least one well-known hotel operator is interested in partnering with Crown Realty, the owner of the property, or possibly buying it and taking over redevelopment completely.

But, he said, it all hinges on the approval of a proposed special-use permit, which outlines the redevelopment plan for the resort, resort-residential units and the property’s golf course.

The permit initially was slated for a council vote Thursday, but the council has continued the discussion to Jan.10 because concerns from council and residents remain.

Officials have not scheduled a vote on the permit.

“The operators are finding us and coming to us and knocking on our door,” he said. “But they’re waiting to see what happens with the (special-use permit).”

Carpinelli said high-profile hotel operators have been interested in the historic Mountain Shadows resort in the past.

In May, Solage Hotels and Resorts, a luxury-hotel operator, entered into a preliminary joint-venture partnership agreement with Crown, but negotiations later broke down, and Crown continued with the permitting process exclusively.

“(Hotel operators) don’t want to get involved when things are up in the air,” Carpinelli said.

One document still missing from the permitting process is the town’s development agreement with Crown, which, Mayor Scott LeMarr said will include the financial aspects of the redevelopment. He said because the development agreement had not been completed by Thursday’s meeting, a discussion to review it will be scheduled for a later date.

“The development agreement will cover the deal points with Mountain Shadows,” he said.

Since the permitting process began in May, Mountain Shadows has seen ups and downs, including proposed changes with the special-use permit, possible claims from both of the resort’s homeowners associations and a bankruptcy filing by Crown.

Crown recently submitted its reorganization plan in U.S. bankruptcy court that it says will help it emerge from bankruptcy and redevelop the resort, which has been closed since 2004.

The reorganization plan may rely on a 20-year-old Mountain Shadows’ development agreement with the town, which could allow Crown to raze the resort’s 18-hole executive golf course and develop the resort at a much higher density than the proposed special-use permit would allow.

Crown officials say allowing the resort, at 56th Street and Lincoln Drive, to be developed based on the 1992 agreement could help bring the resort out of bankruptcy.

Based on the 1992 development agreement and greater density of new structures, the resort has been appraised at about $65million, according to bankruptcy-reorganization plans.

Carpinelli said under the proposed permit, which limits the density allowed, the property is valued at about $45million.

He said the company’s proposed plan would keep the golf course, but trim it from about 3,000 to about 2,500 square yards.

He also said the 1992 development agreement would allow for 484 more resort rooms and residential units than the special-use permit allows.

But Crown is willing to give up some of the value of the 1992 agreement by not developing the maximum it allows, in order to gain approval of a timely “fair and balanced” special-use permit, he said.

However, Carpinelli said if the permit is not approved, Crown may be forced to pursue higher densities and elimination of the golf course for more residential space as allowed in the 1992 agreement.

“We’ve said we want to work with the community and all parties involved,” he said.

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